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Group No - 13
 Group Member List
Name ID
Md. Rubel Ahamed B-120201001

Tapan Halder B-120201026

Md. Akib Hossain Chaklader B-120201045

Md. Sabbir Hossain B-120201080

Md. Forhad Hossain B-120201121

The Expenditure Cycle: Purchasing to
Cash Disbursements

Chapter 13
Md. Rubel Ahamed
 B-120201001
 
 Learning Objectives

The basic business activities and related

information processing operations.

The key decisions and identify the information.

Major threats and various control procedures.

The Expenditure Cycle
 Basic Expenditure Cycle Activities

 Order materials, supplies, and services

 Receive materials, supplies, and services
 Approve supplier (vendor) invoice

 Cash disbursement
 Tapan Halder
 B-120201026
 

Topic : Order Goods or Services

Processing Steps
Order Goods or Services Processing
Steps

Identify what, when, and how much to

purchase
▫ Source document: purchase requisition

Choose a supplier
▫ Source document: purchase order
 Ordering Goods/Services
Threats Controls
1. Stockouts and excess 1 a. Perpetual inventory system
b. Bar-coding, RFID
inventory
2 a. Review and approval of
2. Purchasing items not purchase requisitions
needed 3 a. Price lists
3. Purchasing items at b. Competitive bids
4 a. Use approved suppliers
inflated prices
5 a. Monitor supplier
4. Purchasing goods of performance
poor quality b. Require quality certification
5. Unreliable suppliers
 Md. Akib Hossain Chaklader
B-120201045
 

Topic : Receiving Process

 Receiving Process
• Goods arrive
– Verify goods ordered against the purchase order
(what, how much, quality)
– Source document: receiving report
 Receiving Goods or Services
Threats Controls
1 a. Authorized purchase orders
1. Accepting needed before receiving
unordered items goods
2 a. Bar codes or RFID
2. Mistakes in 3 a. Budget controls and audits
counting 4 a. Restrict physical access to
inventory
3. Verifying receipt of b. Document all inventory
services transfers
c. Segregate custody vs.
4. Inventory theft
receiving of inventory
 Md. Sabbir Hossain
B-120201080
 

Topic : Approve Supplier Invoice

 Approve Supplier Invoice
• Match the supplier invoice to:

▫ Purchase order
▫ Receiving report

supplier invoice + purchase order + receiving report = voucher

• Approve supplier invoice for payment

▫ Source document: disbursement voucher

• Pay vendor
 Approve Supplier Invoice
Threats Control
1. Errors in supplier 1 a. Verify invoice accuracy
invoice 2 a. Data entry edit controls
b. Reconcile detailed
2. Mistakes in posting accounts
to accounts payable payable records to the
general ledger accounts
payable account
Md. Forhad Hossain
B-120201121

Topic : Cash Disbursement

 Cash Disbursements
The final activity in the expenditure cycle is paying suppliers.

Process
The cashier ,who reports to the treasurer , is responsible for paying suppliers.

Payments are made when accounts payable snds the cashier a voucher
package.

Many payments continue to be made by check, the use of EFT and FEDI.
 Cash Disbursement
Threats Controls
1. Failure to take 1 a. File invoices by due date to
take advantage of discounts
discounts 2 a. Match supplier invoice to
2. Pay for items not supporting documents
received (purchase order, receiving
report)
3. Duplicate payments 3 a. Pay only original invoices
4. Check alteration b. Cancel supporting document
when payment is made
5. Cash flow problems 4 a. Check Protection machines
5 a. Cash flow budget
Thank You